Contract Negotiation (a.k.a. Collective Bargaining)

1. Contract Negotiation(a.k.a. Collective Bargaining) Planning and Preparation Negotiation Processes and Concepts Related Issues

2. Planning and Preparation:Do Your Homework! • Planning and preparation are critical to success • “Commit the extravagance of over-preparation” • Auto companies plan 2.5 years before talks • Why? Why does it help? • Develop data and arguments in support of your interests and positions (specific proposals) • Understand your own interests (underlying needs) • Understand how they see things, their positions and interests, arguments they‘ll likely make, and how to counter, if necessary • Understanding external constraints on them and you that affect what can be done, and why they are being “that way” • Understanding your “BATNA” (Best Alternative to A Negotiated Agreement) and how to improve it

3. Management Preps and Planning • Review industry (competition) and area trends trends in bargaining, compensation, employment, etc. • Union convention minutes and similar; local newsletters • Supervisors are a key source of info on contract experience and employee views • Review experience under prior contract • “Bargaining Book” (clause-by-clause) • Cost implications • Related clauses • History, incl. union attempts to change • Problems, experience, incl. grievances • Goals and priorities • Expertise (“who ya gonna call”?)

4. Union Preps and Planning • What do the members want? • Surveys, meetings, reports from stewards • What are their priorities? (avoid “wish lists,” a.k.a. “laundry lists”) • How are various interests accommodated? • Grievance experience under prior contract • Priorities from the national HQ? Constraints? Assistance? Strike authorization? Funds? • Consult much of the same data on bargaining, compensation, and employment trends that is important to management (but emphasis is on fairness, not cost) • Background on Co. (annual reports, SEC, etc.) • Role-playing?

5. Bargaining Team Selection • Management • Usually top HR or IR staff, w/ line experts or officials • Lawyers commonly used by smaller firms • Top-down, clear chain of command simplifies • Union • Political nature of unions greatly complicates team selection; may be elected rather than appointed • Team members may represent various conflicting factions; some may want to use negotiations to launch their further ascent • International Rep (from HQ) often assists in local talks, may lead • Both sides need good negotiators • “Scout” qualities: Honesty, courage, integrity, cool-headedness, etc. • Self-control, good listeners, observant, strong constitution(?) • Able to appreciate others’ views (“perspective-taking ability”)

6. Other Pre- and Early Stage Issues • Negotiation sites: • Neutral sites preferred • Comfort (this could take a while!) • Access to resources (phones, fax, computers, caucus rooms, etc.) • Opening stages • Formality, “photo-ops,” rituals common • “High-balling” common, expected • Offers and their manner of presentation sets tone • “Game plans” are useful (i.e., strategies) • Starting with easier issues can build momentum, set tone, help to make the tougher issues easier later

7. Bargaining Range Concept Union’s Utility Increasing $.50 & no union shop $.10 & no union shop $.40 & union shop Union’s Bargaining Range Mgmt’s Bargaining Range $.10 & no COLA $.25 & COLA $.30 & no COLA Often in terms of $ only - Simpler - Less realistic Management’s Utility Increasing

8. Bargaining Range Concept (Simplified Version) Union’s Utility Increasing $.30 $.10 $.50 Union’s Bargaining Range Mgmt’s Bgng Range $.00 $.20 Note positive settlement range shown; Points shown might represent targets, RPs $.10 Management’s Utility Increasing

9. Bargaining Range Concepts:Some Key Points Mgmt Union • Upper and lower bounds -- strongly influenced by markets and politics • Targets -- most desired outcomes, where subjective expected utility (SEU) is maximized • Subjective (Perceptual) Expected (Uncertain) Utility (Desirability) • SEU(x)=Pr(x)*U(x) + (1-Pr(x))*S(x) where • Pr(x)=Probability of settlement at X without a strike • U(x)=Utility attached to settlement at X • S(x)=Strike costs (negatives) associated with holding out for X • Resistance points (RPs, a.k.a. reservation points) -- where utility drops off sharply (secondary targets) Upper Cost per unit Disemployment Lower Get/keep LF Election/Cert

10. Bargaining Range:Key Points in a Picture Ux Target RPU RPL UB LB x

11. Major Subprocesses in Negotiation • Distributive bargaining(a.k.a. win-lose, zero-sum, fixed-sum) • Integrative bargaining(a.k.a. win-win, variable-sum, mutual gains) • Attitudinal structuring: Addressing the nature of the relationship rather than specific bargaining issues. We recognize an urgent need to eliminate the unfortunate adversarial relationship that has existed for too long between the railroads and union employees … (quote from UTU President, 1998) • Intraorganizational bargaining: Concern is with internal factions, esp. on union side, given democratic nature.What about skilled trades? • Issue types and tactic types: Are distributive issues addressed with distributive tactics, integrative issues with integrative tactics? Only?

12. Theoretical and Empirical Approaches • Psychological approaches stress perceptions, personalities, attitudes, and interpersonal relations • Economic approaches stress economic variables, profits, “wage bill,” objective factors in the environment • Game theory approaches stress strategies and interdependencies of outcomes • Each is like a blind person groping the elephant! • Major problem for any approach: The “cloak of secrecy” that usually surrounds negotiations • Negotiation, like making love, works best behind closed doors -- Mayor of college town commenting on city-school board talks • I wish I could tell you what really happened -- Final comment of Federal mediator after lengthy interview on negotiations between employer association and unions, months after strike was settled • Note contrasts between “Inside Look” dramatization (fiction) and “Final Offer” documentary (reality)

13. Perspectives on Negotiation • Negotiations versus games • Similarities • Conflict of interest • Skill required • Goal-directed behavior • Differences • Don’t know opponent’s utility, values • Little or no control over complex variables or opponent strategy • On-going relationship. Need an agreement you can live with, not a victory in a narrowly defined contest • Some caricatures (stylized, exaggerated views) • Poker game (bluffing, luck, and skill are important) • Debate (to impress your constituents, your team, and maybe theirs) • A no-holds barred power struggle (What were you expecting? Class warfare?) • A rational process in which appeal to facts and logic reconciles conflicting interests for the sake of common interests (ideal)

14. Wide range of climate Mostly an atmosphere of honesty and respect, but sometimes “primitive business” Credibility is essential, but both sides must withhold info too Perceptiveness and listening are critical skills What did they say by omission? Who was that outburst really aimed at? Rituals sometimes perform useful functions 11th-hour bargaining Formal introductions “We both won” statements Flexibility: In general, you want to appear committed and keep them flexible. (If possible, help them retreat) Package approaches (a.k.a. logrolling) Part ritual and custom Functional too, preserves flexibility and conceals preferences Style and Climate in Labor-Management Negotiations

15. Advantage tactics Exploit fears and anxieties “Sticks” to drive the opposition Examples Bluffing Threats Holding back Decoys Deliberate errors Good-guy/bad-guy Bogey man (vague threats) Persuasive tactics Appeal to their interests “Carrots” lead them your way Examples Anticipate objections, refute in advance Agree, then refute Stress similarities and common interests Offer problems, not solutions Present favorite view last Stress value to them Offer responses that clarify and narrow the controversy, not escalate it Advantage Tactics (a.k.a. Dirty Tricks) and Persuasive Tactics in Negotiation

16. Good Faith Bargaining -- A Fine Line? • Recall bargaining subject types (mandatory, permissive, prohibited) • General “good faith” requirement: Sincere effort to reach agreement on mandatory subjects • Note that intent is relevant, but it’s difficult to assess • It’s not concessions on specific issues (H.K. Porter case) • Totality of conduct is relevant -- what’s the overall picture? • Surface bargaining -- going through the motions? • Concessions -- show willingness to compromise and settle? • Proposals -- do they close off, or facilitate discussion? • Stalling, evasion • Unjustified unilateral changes • Bypassing the opponent (the “end around”) • Commission of (other) ULPs • Information issues -- a good faith, reasonable request? • Remedies are not very effective

17. Contract Ratification and Rejection • Ratification required by about half of union constitutions; almost all unions do it (membership or delegate vote) • Functions • Retains “grass roots” member control and prevents “sellouts” • Increases EE commitment to agreement • Helps assure management of compliance and cooperation • Rejection: About 10% of tentative agreements, but rarely with committee endorsement (under 2-3%) • Reasons for rejection • Bargaining team did a lousy job and/or misjudged member priorities • Team didn’t communicate terms or their value well • Poor performance relative to comparisons members use • Internal politics: Effort to make leaders (team) look bad • Part of the plan: Use members as “bad guys,” go back for “second bite” • Also significant: Union team’s credibility at stake

18. Bargaining Outcomes • Recall IR Systems model was developed to help understand differences in outcomes and changes in outcomes over time • One might think of its various elements as “sources of power” • Some examples? • Actor characteristics • Environmental or contextual influences • The process for deciding outcomes • Ideology • More later on compensation and other outcomes